Wednesday tips round-up: Poundland, Ashmore Group

15th Apr 2015 18:49

Contrary to expectations, Poundland's takeover bid for 99p Stores has run into a possible regulatory hurdle. The Competition & Markets Authority has found there are up to 92 areas where the two firms compete, hence the risks to market competitiveness should the tie-up go ahead, although the arguments put forward by the regulator hardly look reasonable. In any case, the company will likely ask for a grace period before it decides whether to continue with the deal and in what manner.Like-for-like sales growth slowed at the end of last year and the firm is heading into some difficult comparators. However, Poundland should be able to meet its target for new store openings which will be quite beneficial for growth. That explains the hefty multiple on which the shares, on 25 times last year's earnings, are trading. Nevertheless, the recent share price fall from over 400p looks overdone - even if the 99p Stores deal ends up having to be abandoned. Buy long-term, The Times's Tempus says.Shares in Ashmore Group are holding up despite the fact that it continues to hemorrhage client funds. It seems investors are coming around to the emerging market debt specialist's view that assets in those regions are undervalued - given the attractive yields on offer.Indeed client outflows have slowed, to a $2bn pace for December and January from $4.2bn in the quarter to the end of December. Adverse foreign exchange effects have also taken their toll - to the tune of $600m. The recovery is taking time but with an attractive dividend yield of 5.4% the stock is a hold, Tempus thinks.